Sunday, April 17, 2011

The Crux of the C-USA lawsuit

ESPN's lawsuit against Conference USA is ongoing and according to the court system, a pretrial hearing will be held on June 1st, 2011 in Manhattan. Much of this entry is word for word what I posted on NCAABBS.com's C-USA board.

In ESPN's complaint, linked here (the zip file contains their complaint and the existing C-USA/ESPN contract), they detail a series of communications between commissioner Britton Banowsky and Burke Magnus, ESPN's collegiate sports division executive.

As a general summary, and again this is ESPN's timeline, a deal was close to being executed in June. They continued to work through the fall, then in late December C-USA presented an offer that was drastically different that the "Ten Points" they had been discussing (must be the framework of a deal). ESPN's complaint guesses that the C-USA BoD had soured on weeknight football.

ESPN's complaint revolves around the First Offer/First Refusal clause. According to the complaint, C-USA properly followed up after the exclusive negotiation window expired (which was mutually extended twice from the end of April until before Memorial Day 2010) within three days with an email as part of the negotiation that included a rights fee that C-USA was willing to live with ($22.5 million for five years). ESPN contends that this email was not an official first offer as part of the clause, even though the correspondence was sent within the three day time frame.

From there, because ESPN doesn't consider the correspondence an official "First Offer" and ESPN believes they didn't provide a "First Refusal", C-USA's rights should have not been negotiated with a third party (FOX).

Key thing about this lawsuit is that while ESPN is fighting to protect their own contractual rights, this suit will be watched by all sports rightsholders as a matter of contract law. Depending on how this case goes, or is settled, expect lawyers to stipulate even further how a written offer should be constituted.